Immigration Trends in the New York Metropolitan Area

Borjas, George J., Federal Reserve Bank of New York Economic Policy Review

1. Introduction

There has been a resurgence of large-scale immigration in the United States and in many other countries in recent decades. Not surprisingly, the impact of immigration on economic conditions in the receiving country is often a topic of contentious policy debate. In the U.S. context, this concern has motivated a great deal of research that attempts to document how the U.S. labor market has adjusted to the large-scale immigration in the past few decades. Much of this research has focused on analyzing the determinants of the skill composition of the foreign-born workforce (see the survey in Borjas [1994]). This analytical focus can be easily justified by the fact that the skill composition of the immigrant population is perhaps the key determinant of the social and economic consequences of immigration.

For example, the connection between the skill composition of the immigrant population and the fiscal impact of immigration is self-evident. The many programs that make up the welfare state tend to redistribute resources from high-income workers to persons with less economic potential. Skilled workers, regardless of where they were born, typically pay higher taxes and receive fewer social services.

Skilled immigrants may also assimilate quickly. They might be more adept at learning the tools and "tricks of the trade" that can increase the chances of economic success in the United States, such as the language and culture of the American workplace. Moreover, the structure of the American economy changed drastically in the 1980s and 1990s, and now favors workers who have valuable skills to offer (Katz and Murphy 1992). It seems, therefore, as if high-skill immigrants would have a head start in the race for economic assimilation.

The skill mix of immigrants also determines which native workers are most affected by immigration. Low-skill immigrants will typically harm the economic opportunities of low-skill natives, while high-skill immigrants will typically have a similar effect on high-skill natives.

Finally, the skills of immigrants determine the economic benefits achieved from immigration. The United States benefits from international trade because it can import goods that are not available or are too expensive to produce in the domestic market. Similarly, a country can benefit from immigration because it can import workers with scarce qualifications and abilities.

In addition to measuring the relative skill endowment of immigrants, the existing literature also stresses the economic consequences that arise from the fact that immigrants cluster in a small number of geographic areas (Friedberg and Hunt 1995; Card 2001). It is well known that New York City and its environs have been an important immigrant gateway for more than a century. Although the geographic gravity of modern immigration has shifted to other parts of the United States, such as California, Texas, and Florida, the New York metropolitan area remains an important receiving site. In 2000, 15.7 percent of all foreign-born workers resided in the New York metropolitan area--down from 24.5 percent in 1970, prior to the resurgence of immigration.

This paper documents the impact of recent changes in immigration settlement patterns on the skill endowment of immigrants in the New York metropolitan area. The empirical analysis uses the available U.S. census microdata between 1970 and 2000 to examine two related questions that inevitably lie at the core of any study of immigration's economic impact in the New York area:

* Which types of immigrants choose to settle in New York?

* How do these immigrants compare with the native-born population of the New York region and with the immigrants who choose to settle elsewhere?

2. Basic Trends

Our analysis uses data drawn from the 1970-2000 Integrated Public Use Microdata Series (IPUMS) of the U.S. census. (1) The data contain information on the skills and labor market outcomes of millions of workers in the United States. …

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